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Engineering Economics Exam With Correct
Answer 2025
_____ morals are fundamental moral beliefs held by virtually all people.<correct
answers>Universal or common
Engineering economy involves , ____ ,estimating, and evaluating the expected
economic outcomes of alternatives designed to accomplish a defined purpose.<correct
answers>formulating
k
In engineering economics, identify the essential elements that influence estimates and
decisions.
Multiple select question.
-Cash flows
-Times of occurrence of cash flows
-Measure of economic worth for selecting an alternative
-Interest rates for time value of money
-Historic rates of inflation
-Sunk cost<correct answers>-Cash flows
-Times of occurrence of cash flows
-Measure of economic worth for selecting an alternative
-Interest rates for time value of money
______ is the difference between an ending amount of money and the beginning
amount.<correct answers>Interest
Which of the following is a reason why estimates of cash flow are different than what is
actually observed?<correct answers>Changing circumstances and unplanned events
Arrange, in ascending order, the steps involved in an engineering economy study. Place
the first step at the top.<correct answers>1. Identify and understand the problem.
2. Collect relevant, available data and define viable solution alternatives.
3. Make realistic cash flow estimates.
4. Identify an economic measure of worth criterion for decision making.
5.Evaluate each alternative.
6.Select the best alternative.
7. Implement the solution and monitor the results
The code of ____ forms the standards to guide decisions and actions of individuals and
organizations in a profession.<correct answers>Ethics
,In engineering economy, ______ is called capital or capital funds.<correct
answers>Money
When a person or organization borrowed money (obtained a loan) and repays a larger
amount over time then:<correct answers>Interest is paid
If the difference between an ending amount of money and the beginning amount is zero
or negative, it means that:<correct answers>no interest is accrued.
The variation between an amount or time estimated now and that observed in the future
is caused by the Blank______ nature of all economic events.<correct
answers>stochastic
If the principal is $275 and the total amount paid is $300, what should be done to
determine the interest?<correct answers>The principal should be subtracted from the
amount. (Interest = Amount - Principal)
In an engineering economy study, technically, the last step is not part of the economy
study, but it is, of course, a step needed to meet the project objective.<correct
answers>True
___ when a person or an organization saved, invested, or lent money and obtains a
return of a larger amount over time.<correct answers>Interest is earned
Given: Principal = $300 and interest = $30. The amount owed now is $<correct
answers>330
Given: Interest accrued over time = $10 and principal = $50. What should be done to
arrive at the interest rate?<correct answers>Divide $10 by $50 and multiply the result by
100. (Interest rate (%) = (interest accrued per time unit) / (principal) x 100)
An individual borrows $500 on September 1 and must repay a total of $1,000 exactly 1
year later. Determine the interest amount and the interest rate paid.<correct
answers>Interest rate paid = 100%, Interest amount = $500
The symbol used for interest rate per time period is<correct answers>i
______ are all types of costs, including disbursements, expenses, and taxes caused by
projects and business.<correct answers>Cash outflows
If the principal for a loan is $275 and the total amount paid is $300, what is the interest
that has been earned?<correct answers>$25
A negative or minus sign indicates a cash<correct answers>outflow
,Given: Interest accrued over time = $10 and principal = $50. Determine the interest
rate<correct answers>20% (10/50)
A startup shows cash inflows worth $3 million and cash outflows worth $1 million. What
is the net cash flow of the startup?<correct answers>$2 million
Given: Money invested = $4,000 and the value of money after 1 year = $5,000.
Determine the rate of interest earned.<correct answers>25% (because 5000/4000 =
1.25)
Given: Net cash flow = $1 million and receipts = $2 million. What is the cash
disbursements?<correct answers>$1 million (Net cash flow must be subtracted from the
value of the receipts)
The symbol for the number of interest periods (years, months, days) is<correct
answers>n
______ are all types of receipts, including sales, revenues, incomes, and savings
generated by project and business activity.<correct answers>Cash inflows
A positive or plus sign indicates a cash<correct answers>inflow
A startup shows cash inflows worth $4 million and cash outflows worth $2 million. What
should be done to calculate the net cash flow?<correct answers>Subtract $2 million
from $4 million. (Cash inflow - Cash outflow)
When several inflows and outflows occur within the same period, the net cash flow is
assumed to occur at the end of the period.<correct answers>True
Given: Net cash flow = $1 million and disbursements = $2 million. What is the value of
the receipts?<correct answers>$3 million
If the interest rate is 15% per year, the amount accrued on $200 in a year is:<correct
answers>$230
______ are all types of costs, including disbursements, expenses, and taxes caused by
projects and business.<correct answers>
For ____ interest, the interest accrued for each interest period is calculated on the
principal plus the total amount of interest accumulated in all previous periods.<correct
answers>compound
A negative or minus sign indicates a cash ___.<correct answers>outflow
Select all that apply
The steps below show how to determine the simple interest for the given set of values.
, Given: Principal = $5,000, i =2%, and n = 15 years.
Step 1: The formula to be used is A.
Step 2: Substituting the values in the formula, we arrive at $B as the simple interest.
Identify A and B.
-Multiple select question.
B = $1,500
-The formula A is the same as:
I = P(1 + i)n
-B = $1,729.34
-The formula A is the same as:
I = P⋅n⋅i<correct answers>-B = $1,500
The formula A is the same as:
-I = P⋅n⋅i
The end-of-period convention in cash flows means that all cash inflows and cash
outflows are assumed to take place at the ___ of the interest period in which they
actually occur.<correct answers>end
Select all that apply
The Minimum Attractive Rate of Return (MARR) is also referred to as the:
Multiple select question.
-benchmark rate
-cutoff rate
-hurdle rate
-capital rate
-sinking rate<correct answers>-benchmark rate
-cutoff rate
-hurdle rate
If the interest rate is 10% per year, the amount accrued on $330 in a year is:<correct
answers>$363
If you want to purchase a new machine but do not have sufficient money, you could
obtain a bank loan at an interest rate of 5% per year and pay for the machine in cash
now. The interest is called the:
Multiple choice question.<correct answers>cost of capital
The symbol ______ is the value or amount of money at a time designated as time
0.<correct answers>P
A corporation uses its own funds from cash on hand, stock sales, or retained earnings.
The method used by the corporation to raise funds is called:<correct answers>equity
financing
Engineering Economics Exam With Correct
Answer 2025
_____ morals are fundamental moral beliefs held by virtually all people.<correct
answers>Universal or common
Engineering economy involves , ____ ,estimating, and evaluating the expected
economic outcomes of alternatives designed to accomplish a defined purpose.<correct
answers>formulating
k
In engineering economics, identify the essential elements that influence estimates and
decisions.
Multiple select question.
-Cash flows
-Times of occurrence of cash flows
-Measure of economic worth for selecting an alternative
-Interest rates for time value of money
-Historic rates of inflation
-Sunk cost<correct answers>-Cash flows
-Times of occurrence of cash flows
-Measure of economic worth for selecting an alternative
-Interest rates for time value of money
______ is the difference between an ending amount of money and the beginning
amount.<correct answers>Interest
Which of the following is a reason why estimates of cash flow are different than what is
actually observed?<correct answers>Changing circumstances and unplanned events
Arrange, in ascending order, the steps involved in an engineering economy study. Place
the first step at the top.<correct answers>1. Identify and understand the problem.
2. Collect relevant, available data and define viable solution alternatives.
3. Make realistic cash flow estimates.
4. Identify an economic measure of worth criterion for decision making.
5.Evaluate each alternative.
6.Select the best alternative.
7. Implement the solution and monitor the results
The code of ____ forms the standards to guide decisions and actions of individuals and
organizations in a profession.<correct answers>Ethics
,In engineering economy, ______ is called capital or capital funds.<correct
answers>Money
When a person or organization borrowed money (obtained a loan) and repays a larger
amount over time then:<correct answers>Interest is paid
If the difference between an ending amount of money and the beginning amount is zero
or negative, it means that:<correct answers>no interest is accrued.
The variation between an amount or time estimated now and that observed in the future
is caused by the Blank______ nature of all economic events.<correct
answers>stochastic
If the principal is $275 and the total amount paid is $300, what should be done to
determine the interest?<correct answers>The principal should be subtracted from the
amount. (Interest = Amount - Principal)
In an engineering economy study, technically, the last step is not part of the economy
study, but it is, of course, a step needed to meet the project objective.<correct
answers>True
___ when a person or an organization saved, invested, or lent money and obtains a
return of a larger amount over time.<correct answers>Interest is earned
Given: Principal = $300 and interest = $30. The amount owed now is $<correct
answers>330
Given: Interest accrued over time = $10 and principal = $50. What should be done to
arrive at the interest rate?<correct answers>Divide $10 by $50 and multiply the result by
100. (Interest rate (%) = (interest accrued per time unit) / (principal) x 100)
An individual borrows $500 on September 1 and must repay a total of $1,000 exactly 1
year later. Determine the interest amount and the interest rate paid.<correct
answers>Interest rate paid = 100%, Interest amount = $500
The symbol used for interest rate per time period is<correct answers>i
______ are all types of costs, including disbursements, expenses, and taxes caused by
projects and business.<correct answers>Cash outflows
If the principal for a loan is $275 and the total amount paid is $300, what is the interest
that has been earned?<correct answers>$25
A negative or minus sign indicates a cash<correct answers>outflow
,Given: Interest accrued over time = $10 and principal = $50. Determine the interest
rate<correct answers>20% (10/50)
A startup shows cash inflows worth $3 million and cash outflows worth $1 million. What
is the net cash flow of the startup?<correct answers>$2 million
Given: Money invested = $4,000 and the value of money after 1 year = $5,000.
Determine the rate of interest earned.<correct answers>25% (because 5000/4000 =
1.25)
Given: Net cash flow = $1 million and receipts = $2 million. What is the cash
disbursements?<correct answers>$1 million (Net cash flow must be subtracted from the
value of the receipts)
The symbol for the number of interest periods (years, months, days) is<correct
answers>n
______ are all types of receipts, including sales, revenues, incomes, and savings
generated by project and business activity.<correct answers>Cash inflows
A positive or plus sign indicates a cash<correct answers>inflow
A startup shows cash inflows worth $4 million and cash outflows worth $2 million. What
should be done to calculate the net cash flow?<correct answers>Subtract $2 million
from $4 million. (Cash inflow - Cash outflow)
When several inflows and outflows occur within the same period, the net cash flow is
assumed to occur at the end of the period.<correct answers>True
Given: Net cash flow = $1 million and disbursements = $2 million. What is the value of
the receipts?<correct answers>$3 million
If the interest rate is 15% per year, the amount accrued on $200 in a year is:<correct
answers>$230
______ are all types of costs, including disbursements, expenses, and taxes caused by
projects and business.<correct answers>
For ____ interest, the interest accrued for each interest period is calculated on the
principal plus the total amount of interest accumulated in all previous periods.<correct
answers>compound
A negative or minus sign indicates a cash ___.<correct answers>outflow
Select all that apply
The steps below show how to determine the simple interest for the given set of values.
, Given: Principal = $5,000, i =2%, and n = 15 years.
Step 1: The formula to be used is A.
Step 2: Substituting the values in the formula, we arrive at $B as the simple interest.
Identify A and B.
-Multiple select question.
B = $1,500
-The formula A is the same as:
I = P(1 + i)n
-B = $1,729.34
-The formula A is the same as:
I = P⋅n⋅i<correct answers>-B = $1,500
The formula A is the same as:
-I = P⋅n⋅i
The end-of-period convention in cash flows means that all cash inflows and cash
outflows are assumed to take place at the ___ of the interest period in which they
actually occur.<correct answers>end
Select all that apply
The Minimum Attractive Rate of Return (MARR) is also referred to as the:
Multiple select question.
-benchmark rate
-cutoff rate
-hurdle rate
-capital rate
-sinking rate<correct answers>-benchmark rate
-cutoff rate
-hurdle rate
If the interest rate is 10% per year, the amount accrued on $330 in a year is:<correct
answers>$363
If you want to purchase a new machine but do not have sufficient money, you could
obtain a bank loan at an interest rate of 5% per year and pay for the machine in cash
now. The interest is called the:
Multiple choice question.<correct answers>cost of capital
The symbol ______ is the value or amount of money at a time designated as time
0.<correct answers>P
A corporation uses its own funds from cash on hand, stock sales, or retained earnings.
The method used by the corporation to raise funds is called:<correct answers>equity
financing
